Acerinox SA

F:ACE1

Good morning to you all, and welcome to the third quarter 2026 results presentation. Before we begin, we would like to thank everyone for the messages of concern following the train accident 2 days ago. While that route is commonly used by our staff traveling to the factory, fortunately, no Acerinox employees were injured. Our hearts go out to those affected, and we extend our deepest condolences and support to the victims and their families. Q3 has been a strong quarter for Acerinox. As a group, we have demonstrated our strength in a complex market situation. And as we will explain during this call, we continue to prioritize our working capital and solid cash generation. During this call, we will hear from our Chief Corporate Officer, Miguel Ferrandis; Esther Camos, our Chief Financial Officer; and Carlos Lora-Tamayo, our IR, Communication and Reporting Director, who will explain our Q3 results and provide an outlook for Q4.

Before we start with this presentation, let me remind you that this conference is being broadcast on our website, acerinox.com. And now I will hand you over to our Chief Corporate Officer, Miguel Ferrandis. Miguel, please go ahead.

Thank you, Borja. When preparing this results presentation, trying to find the word, probably what comes more to my mind is the word of pride. We are presenting very remarkable figures in the current days with challenges all over the world and with a highly complex environment. We are not yet reaching the levels of consumption almost in every area of the pre-COVID time. But what appears evident in these results achieved in the third quarter and in the 9 months is that we are capitalizing opportunities where they are and when they come, and we are taking the best of that. If you see the figures appearing in this highlights, you can realize that the figure of sales, EUR 1.6 billion for the third quarter is very similar to that one of the previous quarter.

But having said that, we have improved our EBITDA at 13%, reaching this figure of EUR 199 million. We would like to be predictable when we forecast the outlook in the results presentation of the Q2, we announced that we shall be slightly above, and we shall be at 13%, 13 above the figure of the second quarter. But when we go to the 9 months figure, with this EUR 4.5 billion of sales, yes, 2% above the sales of the first 9 months of last year. Our EBITDA has gone up to EUR 470 million, and this means a 46% increase in EBITDA with 2% increase in sales, 46% increase in EBITDA. This demonstrates what we are trying to explain today of how we are able to capitalize the opportunities when they come, and this is as a consequence of our consistent strategy and the evidence that, that strategy is fruitful.

Our operating cash flow is slightly negative for the quarter, slightly positive for the 9 months. This is obviously driven by the working capital. Our working capital is running normally in parallel of our performance and the strong improvement that we are having is obviously at the end, having the consequence of the increase in working capital in most of the year up to now in the 3 quarters. This normally shall be strongly reduced or neutralized as you normally know in the fourth quarter. But it's true that the figure of the working capital at September, combined with the strong CapEx programs in which we are involved, combined with the semiannual dividend payment that has been taking place during the quarter has taken our debt to the peak in the year of 1.5 that at the end shall be reduced in the fourth quarter, mostly as a consequence as the expected working capital reduction.

So these are the main highlights for today's results presentation. In the following slide, we are showing the gradual improvement that we are realizing quarter after quarter. This is the reported EBITDA of the last 3 years. And at the end, what is clearly more easy to realize is the impressive track we are experiencing during year 2026. An outsider of the company could consider that this is as a consequence of a cycle, several tailwinds that are benefiting us everywhere. And by far, this is not the case. So this is not that we are entering in a new cycle in a new cycle that all the circumstances and all the markets are booming, not by far. At the end, we still are seeing a low demand everywhere. Some specific sectors still are depressed.

In addition, we are experiencing a strong increase in energy cost. There is huge uncertainties almost everywhere. But as we said before, the strategy, the diversification, the continuous improvement in efficiency are allowing us to experience this strong recovery, reaching figures in the third quarter of almost EUR 200 million as a quarterly figure with a margin EBITDA of 12.5%. This is coming, as I said before, taking the opportunities where they are, mostly of taking the good momentum that the specific sectors are experiencing in the States, combined with the turnaround that we are making in Acerinox. So at the end, this subsidiary that, in our case, has been loss-making for the last years, as you all know, we are gradually improving it. We are -- we have reached almost breakeven at EBITDA level.

We mentioned it in June. We are still almost in breakeven. At the end, obviously, the energy cost in the third quarter have improved, but we are reaching this almost EBITDA breakeven level in the depressed base prices that we are experiencing in Europe. And this is a great success. So at the end, the gradual recovery is a combination of that. Higher contribution, taking advantage of the proper mix in the American market and that the previous loss-making unit that was Acerinox now is turning around and reaching almost the breakeven. If we go to our main market, which is obviously North America, January to September, the states, North America is 56% of our sales. So clearly, it's our main market more than any other circumstance, we are North American.

And the main virtue that we can remark today about the American market is the stability. And at the end, this stability is obviously well supported by the American administration that is consistently supporting the local industry. And this is providing stability and that stability is good for every player in the market. So the prices in the stainless remain solid in America. But this is circumstances that is favorable to the market, favorable to the customers, favorable to the distributors and also favorable to the producers. So every player knows the status quo and consequently, this allows us that even though the demand is low, but the players are facing the current circumstances in a, let's say, satisfactory way.

The imports have been reducing, reaching or representing now 21% of the total market. Still North America is a net important market, but the imports have been reducing more than 18% for reaching that level. So this is a good sign for the coming months. Another good sign for the coming months is also that the inventories remain low. And at the end, what still we are waiting is that the good momentum we are seeing in performing very strong. Obviously, as you all know, the aerospace sector is a sector that is now in a very good momentum. In addition, also the construction of data center is also driving increases in demand and in consumption of several of our products. And for example, in the -- all those related to the energy end uses as well as also the pipes and so on. So this is also experiencing a good momentum.

Other sectors in which we historically have been active are also doing great. For example, the food and catering industry, this has already recovered. But still, we are missing sectors that for us are relevant. And one sector that for us is relevant and still remains negative, for example, is the domestic appliances. Another sector that still is to come is the transport in which especially in the heavy transport, we are active as well as in the trailer. So we are, at the end, as I say, taking the best from those sectors that are doing great. And for us, it's really exciting to imagine what could be our contribution and our profitability in America when the proper cycle comes and all these other sectors that still are relatively dormant incorporate again and follow the trend of the sectors that already have been reacted.

So we are still satisfied and optimistic regarding the North American market and our performance in the North American market. Okay. To the European market.

This year, it's been a very challenging year, a very volatile year for Europe. The weak economy situation, the geopolitical uncertainties are affecting our demand that is in a very low point. Saying this, it's true also that in the first half of the year, we experienced a good demand, a strong demand coming from big distributors. This is probably driven by some lack of supply. The imports in the first half of the year went down significantly. Mainly in the first 4 months of the year. But at the end of the second quarter, imports started to increase. And this creates also some expense of stocks in the market that it's been delayed, the expected recovery for the third quarter after the implementation of the new trade measures.

So consequently, we have an overbuying in the first half of the year and then a third quarter marked by the typical seasonality, the energy prices also that went up significantly, yes, both electricity and gas. and also a destocking process. The consequence of this is that the apparent demand went down 22%, a very big number quarter-on-quarter. Imports went down 5-0, 50% in this quarter and represents 16% of the total market. Keep in mind that we were coming from an import penetration last year in the first 9 months of last year of 24%. So this is the good news that imports are with these new measures moving down. Okay.

So saying this, the third quarter, a very challenging quarter, seasonality, excess of stocks in the market. But what we are fully confident is that the new European regulation is going to be a game changer for the European market. Once we digest all these inventories that are in the market, local producers will benefit from this reduction on imports. And this new regulation will provide much more stability for the market, the same stability that we have in the U.S. So we are positive for the mid- long term, hopefully, the beginning of of the year, we can start to see this better environment. But it's true that this is -- this recovery. It's been delayed due to the excess of stock, the imports that came in advance of the implementation of the [indiscernible] measures.

So now moving to high-performance alloy. The market environment of the high-performance alloy industry, same as occurs in stainless is different depending on the region, but more specifically depending on the sector. Starting by U.S., okay, the stronger -- it is true that the stronger support of the U.S. administration to the industry is benefiting high-performance alloy through the 15% of global tariff on inputs. As you know, the Section 232 does not include the high-performance alloy material. Demand in the U.S. continues very strong, improving the order entries and the backlog. This, of course, is making that our lead times are extending, but our capacity utilization levels are also becoming higher utilization. And we keep confident on the good momentum for 2027.

We have insisted that most of the orders on the aerospace were more for 2027 than 2026. And this is the result and the evidence on the increase on our backlog. The strongest markets in the U.S. are those in which we are. So it's aerospace and gas turbines. Gas turbines. The aerospace continues picking up and also space application are gaining some traction. The strongest growth is in the industrial gas turbines, as I mentioned, both in traditional and emerging technology and driven by the power generation requirements for electrification. So good momentum and good expectations for 2027. And moving to Europe, moving to Europe, the demand remains subdued due to geopolitical uncertainties.

We are still waiting some investment projects, but the positive thing here is that we believe that the worst is over. The worst is over, and we have started seeing some signs of recovering, both in oil and gas and in chemical processes. So this gives us confident for 2027. Just as a note, for the first time, the -- our order book in Europe is -- has become slightly higher than that for '25, okay? So this is why make us to believe that the worst is over. Going to some sectors, of course, the geopolitical situation is keeping demand low in oil and gas, but the reconstruction is still to come. And even it is expected that when it comes, it might create some supply problems due to the excess of demand. So we are confident for the future. While those sector recover.

So while those sectors recover, what we are trying is to capitalize the best of the moment by moving to our production to other improving sectors like nuclear with a strong demand for small modular reactors or semiconductors with lower volumes but better margins, okay? So we are always trying to get the best of the moment. And our good news here is that we really think that we are seeing signs of recovery. Going to the consolidated results of the group. Okay? Again, I think that the operational performance of the third quarter demonstrates the strength of our strategy of diversification. In the third quarter, despite of the lower activity, mainly as a consequence of the seasonality in Europe and also despite of the Middle East conflict, our EBITDA has amounted to almost EUR 200 million to EUR 199 million, being the best operating result in the last 13 quarters, okay?

And also with margins growing, we are now in margins of 13%, mainly due to the higher activity in the U.S. in both divisions. As I mentioned, both divisions are performing better, okay, but with a stronger contribution of the stateless division. The activity, the activity in the third quarter, if we compare it, it's been lower than the second quarter, but I think that it is remarkable that if we compare it to the third quarter of last year, okay, we are growing 11%. And if we consider the 9 months, we are also growing by 5%, okay? So I think that the activity is getting better. EBITDA, as Esther mentioned, is EUR 199 million, mainly supported by the higher activity in the United States, both in stainless and in HPA. But what is also important is also because of the turnaround of our plant in Algeciras that Carlos will later mention. This EBITDA, well, is negatively impacted by the Middle East conflict. So aside of the impact that it might have on our sales to the oil and gas, definitely, the increase of cost in energy and in transport has had an impact in this quarter of EUR 16 million and EUR 24 million if we look at the year figures.

The result before tax, which I think is also remarkable is 3x with all this 3x better than that of 2025, okay? So now we go to the operating cash flow. We will later explain in the capital allocation, but we have had a slight negative operating cash flow of EUR 16 million. This is mainly driven by the increase of working capital. I will explain this. As a result of the good trend of results, as Miguel explained, there's been a working capital. But I think that it is important to explain the reasons in the quarter, which is mainly led by 2 opposite factors. On one side, we have had a slight increase in inventories of EUR 71 million out of the EUR 152 million of increase of working capital, EUR 71 million is an increase of the inventories.

And this increase on inventories is mainly explained by 3 reasons, okay? And we think these are temporary reasons. So we will be able to revert in the fourth quarter. These reasons for the increase of the inventories [indiscernible]. First of all, the preparation in the U.S. for our programmed annual shutdowns, maintenance shutdowns that we are doing in Q4, both in the United States and in VDM. This has made us to build some stock to continue being able to serve our customers. Secondly, the higher order book in high-performance Alloy division, extending our lead times and increasing our capacity utilization is making also us to increase our work in progress material. So as long as all this stabilizes, we won't have such an increase.

And then there is also a third reason for that, which is the replacement of the external processing at VDM, the partial replacement of external processing by internal in-source, which gives us also a reduction of cost and improving efficiency is making us to have longer routes. So all of that is what has made us to increase the inventories. The second reason for the increase of working capital is a reduction of payables of EUR 91 million. And this reduction of payables is mainly due by the reduction of purchases due to the lower activity that we expect for the fourth quarter, okay? So we are reducing purchases. But at the same time, we are paying those payables of the highest level of activities of the month of mainly June and some July, okay?

So this is what is also making the working capital to increase, okay? So with all this, we definitely believe that we will be able to reduce the working capital in the fourth quarter. We will have less activity, and we will generate cash. With all this, our net financial debt has ended in EUR 1.5 billion, but we are confident that we will reduce it for the fourth quarter.

The stainless steel division has experienced a very strong third quarter. In fact, it's the best quarter since the second quarter of 2023. This is mainly marked by the solid performance in the U.S. by our North American stainless. That more than offset the seasonality in Europe and the energy prices increase, okay? So this EUR 175 million of EBITDA, it's 14% higher than the previous quarter and more than double the EBITDA of the third quarter '25. We are seeing a very progressive improvement during the year. In the first quarter, we achieved an EBITDA margin of 8%. In the second quarter, we achieved the double digit, 12%. And in this third quarter, we achieved a remarkable EBITDA of 14%. While the situation this year, it's clearly better than that of the last year. We think that this consistency and solid performance of the U.S. market is key.

On one hand, we have higher volumes than the previous year. But also, as you may recall, we increased prices in the second half of '25, first for 1/3 of our order book. And since the very beginning of the year, we fully implement the price increase for the rest of our order book. So this allow us, on one hand, to improve our profitability. But also the situation in Acerinox Europe is improving. You know that we have the turnaround program, trying to focus more on margins, on high added value product, trying to improve our product mix. And this allow us, as we are commenting today and we explained when we published the second quarter results to achieve breakeven in the month of June, even with very low prices because prices are still in a very depressed situation, but we were able to achieve this breakeven.

In the third quarter, it's true that with the increase in energy prices, this has been difficult to maintain, but we are very, very close to the breakeven. If we move to the 9-month figure, we achieved an EBITDA of EUR 411 million compared to EUR 218 million of that of the same period of '25. This is almost 90%, 9-0 higher than in '25. Also, the EBIT is EUR 317 million, that is 145% higher than the previous year. Last but not least, we would like to highlight the operating cash flow. As Esther mentioned before, the working capital impacted this year significantly. But even with an increase in working capital due to the higher activity of EUR 195 million, we were able to achieve in the stainless steel division an operating cash flow of EUR 73 million.

Moving to the high-performance alloys. Also, we experienced a better quarter than the second one. We increased sales of 4% and the EBITDA in a 9%. It's true that these figures still are very well below the last year levels. Maybe to explain this, it's important to look at our main sectors of consumption. You know that aerospace and industrial gas turbine in the States and oil and gas and CPI in Europe. Those of the U.S. market are performing in a good situation and the ones in Europe below those of the U.S. So the aerospace and industrial gas turbines, we have a very strong order book as we are commenting. Important to mention that this strong order book is not yet reflected in the P&L. This will be mainly next year. So we expect that this good momentum will continue, and we will improve our profitability in 2027.

The oil and gas due to the Middle East conflict is in a weaker situation. But as Esther mentioned before, we think that with the -- once this conflict finish, we have a good opportunity to improve our order book with the reconstruction in the area. So we have no doubt that this end market will improve moving forward. The chemical process industry, the CPI is the one that is in a weaker situation. We are switching a bit to more nuclear and semiconductors, trying to improve our presence there. And we are improving a bit our order book. This sector is a strategic sector for the European Union. So we hope that Europe is doing in other sectors can put measures in order to defend the chemical industry in the European market.

Maybe to finish with a positive news here. It is -- September was the first time in the last 12 months that the order book increased in VDM compared to last year. So hopefully, we are in an inflection point and the worst is behind us.

So let's explain now the cash outs of the quarter. I will start by the remuneration to shareholders. Of course, half of the dividend of the year is paid in this quarter, okay? We maintain our remuneration policy to our shareholders steady at EUR 155 million for the year. And out of this EUR 77 million have been paid in this quarter, okay? The regarding CapEx, so we continue, as we have been announcing in all our presentations with our investment projects to execute the strategic plan. Those investments are -- that we have been explaining are mainly focused on our most profitable markets. We have finalized the investments of NAS of the EUR 244 million to increase the capacity. All of that we already explained and was executed in Q4.

And over the next few months, just in North American stainless, we will put in place the cogging that will allow NAS to produce the long products for Haynes. At Haynes, we have started with the civil works of the new building for the new VDM and for the new forge. So total investments in the quarter, including also the maintenance is -- has been of EUR 80 million and EUR 228 million for the year, in line with the investments that we have been announcing along the year. Tax payments. Yes, we have made tax payments also this quarter of EUR 38 million as a result of the profitability of our -- of the U.S. okay? Just as a note, last year, for example, and to compare -- to be able to realize the good momentum of the U.S. market. Last year, we paid EUR 5 million in the same quarter.

And regarding working capital, yes, we have increased working capital. We are confident that we will be able to reduce. The reasons for that have been already explained. The working capital in the year, as Esther mentioned, is mainly driven by the increase of inventories and that increase of inventories have been also affected by higher raw material cost and higher production costs with the increase on the electricity and gas that we mentioned compared to last year. All in, for us, this third quarter is a temporary increase on the net financial debt of EUR 174 million, but we are confident that we will be able to reduce our debt for the fourth quarter.

And yes, to conclude, the main comments for remark what has been explained. First of all, we are proud of presenting today an EBITDA of EUR 199 million in the current circumstances with all the uncertainties and with all the challenges and low demand. So for us, this is a fact of pride, no doubt. We are taking the best for the solid performance of the specific sectors in the States. Regarding Europe, still the expected recovery in demand that could have been taking place in the third quarter still is not coming, but there are some signs that maybe for '27, we could see a gradual recovery in the European demand. And at the end, the bases are there. The imports are reducing. The inventories also remain low. So we think that this may come, but still we have not seen in the third quarter.

But having said that, we have reached a new level of efficiency, and we are almost in breakeven in Acerinox even in the current days where prices -- base prices are in the range of EUR 500. This could be unimaginable some years ago. In our long-term strategy, at the end, it's obvious that the diversification in regions and in sectors allow us to take the best of the opportunities that are coming, and this is the driver of the high profitability that we have been achieving in this quarter. And then thinking from now to the future regarding the outlook on the short-term basis of the outlook for the Q4, we normally experience in the Q4, the seasonal slowdown of our main market, which is the States. So on that basis, we just indicate that probably now the EBITDA of the Q4 is going to be lower than the Q3.

The Q3 is going to be the peak of this year, no doubt. In the HPA, we take the best of the sectors that are doing good. And this is -- this has come and this has come to remain. So all the evidences for the coming future in the aerospace in the industrial gas turbine remains very robust. And fortunately, as we have said, probably the worst is over in the sectors of oil and gas and chemical process industry. The sector of oil and gas for us, especially through VDM is very relevant. We are world leaders in that sector. And at the end, it's a matter of time that this sector may come back. And probably when it comes back, not only recovering all the projects and expansions that have been put on post.

But in addition, the reconstruction of all the damaged infrastructure probably shall create an incredible momentum for the oil and gas in HPA. So this is a sector to be patient and remain. We have that clear. And in the sector of chemical process industries, as has been expressed, we are moving ourselves to those specific parts, for example, like the nuclear in which clearly also the trend is positive, and we are growing there. And on that basis, also, we are confident and this drives part of these green shoots that we are seeing. So as general guidance, I repeat again, the Q4 shall be lower. It's a 2 months -- it's a quarter of 2 months in America, which is the great contributor to our profit. This is clear.

But as a consequence of that, as a consequence of the reduction in working capital that we shall experience as a consequence of the more or less seasonal slowdown, but as a consequence of the programs that has been explained by Esther, the maintenance and so on, this shall be reduced. And consequently, the net financial debt obviously shall be also reduced for the third quarter. I remember now that the fourth quarter last year, the working capital reduction has been in a range of EUR 200 million. So more or less, we understand that this year depending on how is the visibility of the starting of the year, we are precise, but we are obviously not only consistent but focused on the strong reduction in working capital for achieving the fourth quarter.

So thank you very much. And now absolutely open to answer any questions coming from your side.

Let's start by the last one, okay, of the working capital reversal-- okay? It's difficult -- it's always difficult to predict because it very much depends on the raw material costs, but I think that Miguel also gave an indication of what happened for - in the fourth quarter of 2025 with constant raw materials in which we were able to reduce it by the EUR 200 million. So of course, it will depend on raw material costs. It will also depend on the order book. We think that because of the order book, we won't be raising much more inventories because it has already been done on the Q3. And on the side of trade receivables and payables, we think that we will that we will compensate these 2 effects. So it will mainly be driven by inventory reduction. And we think we -- it's difficult to predict because of the raw material, but I think anything about the -- what we achieved last year could be achievable.

In regard to the potential U.S. listing, Well, I think this issue was well explained by our Chairman and our CEO in the shareholders' meeting, which is at the end, obviously, a consequence of our studying of all the possibilities that bring value and being prepared for as we are making in every sector, capitalizing opportunities. So as has been explained, for us, clearly understanding that we are North American most than any other region -- we are growing in America.

We are investing in America because it's obviously where we are obtaining more satisfactory and quick result. So as a consequence of that strategy of growing in North America, it takes sense to make the home work for being prepared if any time in the future appears convenient or the Board consider that it's valuable to obtain a certain listing in the states. So what we are making internally is the homework for being prepared for a possible U.S. listing.

If the circumstances recommend that -- on that, exploring that possibility and that homework obviously means that we need to integrate the divisions that previously have been performing separately and even some of them have been recently acquired. So we are involved in that process.

We are involved in the integration of the different business units. -- but nothing new is coming since all this explanation was done at our shareholders' meeting. So we are keeping that homework for making the group be prepared for that. if this is decided anytime in the future. In regard to Columbus at the end, in the current challenging day for the markets everywhere -- we have mentioned that in America, the market is stable and steady and robust as a consequence of continuous support of the American administration since several years ago and in different administration periods.

This clearly benefits the market. Fortunately, Europe has been following the trend. Unfortunately, during 2026, several measures have been putting in place also for supporting the European industry. And this improvements shall be gradually appreciating in the coming years. But in South Africa, still is a market that has become an open highway for all the Asian exports that are now able to enter in Europe or entering in America, and those are being moved to South Africa. This is something that the local industry has been clearly working and also pushing for obtain equivalent measures to protect the local market in South Africa, but still that measures are not in place.

So this has been spoiling the local market. And at the end, the circumstance, obviously, on this basis for Columbus is that it's not easy in the current circumstance to have an active present overseas. And still, the local market is suffering this Tsunami of the Asian imports that are not finding place in other markets. We remain now confident that maybe that mechanisms are more close to appear. In the last days, we have -- we have been reading that finally appears to be an agreement between ArcelorMittal and the South African government through the IDC. And this may be could make that, at the end, having stalled all those negotiations for the acquisition of the Arcelor business by the government, maybe could have the consequence at the end finally the tariffs and the tariffs that the industry is claiming for are finally coming. But still, we have not seen that. We hope that this may come. And by far, this is absolutely critical for the industry to have that protection in place in line with the protections that other markets are experiencing. But still, this is not there.

We are not contemplating further capital injection in the in Columbus. At the end, our strategy is making the necessary investments where there is a visible return. And still, this is not the situation in South Africa. As I said before, some of the circumstances may change, and we are waiting on that. On the time being, we shall not make any further injection or capital injection in Columbus.

Thank you, Tristan, for your question. I think in this case, the Q3 performance strong is easy to explain. As you know, Q3 in Europe is mainly affected by seasonality, okay? So there is a less contribution in Europe and less activity, which is mainly focused in Europe, not in the United States. Our stronger market continues being positive and it has had better volumes than Q2, higher activity. And therefore, in the end, the contribution to the group is being higher because of the 2 effects. On 1 side, we have less contribution from Europe. And on the other side, we have higher contribution of the most profitable markets in this case. -- which is our stainless steel division in the United States, okay? So all in is what is making our best performance. And to with regards to HPA, we have been announcing also the increase on the order book that we are having, especially in sectors which are more profitable. like the aerospace. And therefore, you have seen that there is a slight better contribution also from HPA to the group. But with regards to stainless is basically because of the good momentum of the United States. You have seen that there's been also an increase in the apparent consumption in the States in the quarter. It continues the reduction of the imports as well. And all this is making us to get these better margins.

Correct. That is correct, is mainly -- these higher contribution and volumes in the United States and the momentum of the seasonality of Europe.

These are important sectors for us that are not in the best times and can be about 15%, 20% of the total order book.

Well, for the HPA, the -- what we are having currently is, as has been explained, a very strong track America aerospace and industrial gas turbine. This is making us having a high capacity utilization now, our order book is full. But the evidence of this good momentum on the P&L shall come more for the '27. So we are benefiting, obviously, for the high capacity utilization and what that implies in the efficiency of our American business. but the main contribution of this sector in profits is to come in '27, still not in '26. And in addition, as occurs in -- -- in NAS our stainless business, the seasonal slowdown in America takes place in the fourth quarter. So this is mostly to be appreciated in the coming year.

As is the same in the European division for PDM. We are seeing green shots now, and this is -- this is clearly for us a fact of optimism, but the maturity of the process of the of the HPA creates that it takes substantial months until that is finally drop to the P&L in a strong recovery. So we understand that the worst is over.

In terms of the oil and gas still, we are as we are patient, as we have mentioned, but we have seen now some more interest on the ordering side as we are moving also more to the nuclear. But this is a gradual movement that, at the end, may come more for the next year. So -- we understand that the worst year for VDM is going to be the '26, there shall be a gradual recovery in the '27. But it takes several months from when these green shoots are appreciated to when it's materialized in the higher contribution. So this is more to come in the '27 and -- and as I said before, when we are used that in the stainless, the trends in the demand came followed by profit movements in 2, 3 months. In the case of the HPA, this takes at least 9, 10 months. So this is something to come more for the '27, highly visible and appreciated -- in the second half of 2027 and more evident probably for '28. So it's a recovery, but it's a slow recovery. Having said that, I repeat, the worst is over.

We cannot give too many precise details. But let's make a simple arithmetic. The great contributor to our profits is in North America. The fourth quarter is a quarter of 2 months. If you take -- if you bring that in your model, the deviation shall not be high.

Okay. The second quarter of this year had -- I think that they had good volumes in the United States -- okay? What we are insisting and also Miguel explained is that the main one or the region that is going to be more affected as it is every year in the fourth quarter in United States, okay?

So we won't be having the similar volumes as we have had in the in terms of volumes was also higher in Europe. So definitely, the volumes will not be that. If you look -- and this is -- I think that this is the math that Miguel was trying to do. If you look at the fourth -- at the third quarter and you just think that the fourth quarter, instead of being 3 months is going to be -- 2 months because the higher contributor is going to have 2 months, I think that we are giving more or less an indication of what could be the range of results.

We don't think that the prices will continue being as it is. We don't think there's going to be an increase of prices. So the margins will be kept stable in all the markets. The only thing that will happen is that we will have this less activity. So it's a question of 1 month of activity. And if more or less the 3 months are keeping constant. This is more or less the best indication that we can give.

The capacity utilization in Europe in the year is about 70% Okay. In NAS, the ramp-up of the new cold rolling is going progressively. You know that we don't use to put pressure in the market. We try to take care of the market in this sense -- without the new line, we can be at 90% and capacity utilization and with this new line a bit below 80-something percent, capacity utilization. And in Columbus, we can be at 60%, 65%. In any case, Maxime, keep in mind that -- we are switching a bit in our strategy. In general sense, we are not focusing volumes. We try to prioritize margin and product mix. .

So let's say that it's time the capacity utilization is less important. We can be at 70% or 75%, 80% capacity utilization with very high margins or we can be at full capacity with lower margins. So we will try to prioritize margins in this sense rather than volumes.

We have been clearly working on that for several months and at the end more or less our focus clearly is in the case of the general sector of the chemical process, we cannot wait for a full recovery. There are basis for us to to be very confident on the oil and gas in order to be patient there. But in the CPI, which is a very wide spread sector at the end, there are some of the traditional customers that maybe now shall be more open to bring more commoditized imported HPA. So what we want is to focus ourselves in the sectors more, let's say, complex, more sophisticated with more homologation request. And on that basis, we already were there for certain customers.

This sector is growing. And we are making, obviously, our best and approaching for additional customers. So we are in that process. It's is a sector that the prospects are very good, but it shall be obviously a gradual introduction. For us, is, as I said, it's a sector to be in, especially it's a sector that in Europe is a relevant sector to be in, but the effect shall be more gradual.

The maintenance set down that we mentioned is a regular annual shutdown. Okay? It is true that in the case of the U.S. in this year, we have an additional shutdown because of the start-up of the COGS that we mentioned on the long products, but it won't have an impact different to what we have seen in previous years as this maintenance is a regular thing that we are doing every single year. So the impact would be as mentioned -- as it is every year. And just considering that in the end, it is 1 month in total less of activity with this maintenance and Thanksgiving between Thanksgiving and Christmas-- everything and the market normally is with low activity, and this is the time of the year that we use for these normal maintenance shutdowns.

Well, the VDM is profitable. Its profitability in this year has been substantially reduced the most relevant sectors for VDM, as you know, is the oil and gas and the chemical process, obviously. Oil and gas has been the full year on a comeback. The chemical process industry, most traditional end users, as has been explained, are absolutely dormant -- we are growing, and we are moving more and using our possibilities to grow more, as mentioned in the nuclear.

We are also growing in the other space. We still are in the electronic. We still are in the car industry. So there are -- there are some sectors that provide stability, compensating from the strong correction we have experienced in the other.

So VDM is profitable, remains being profitable, but it's under pressure. Regarding the working capital, some of the effects that are also taking place this year and mostly in VDM is as a consequence of a strategy -- and as Esther mentioned this previously, for gaining efficiency for doing our best for avoiding dependence from third players for reducing costs. We are trying to optimize as much as possible and process and having the possibilities that we have internally in Europe for processing HPA in [indiscernible], in -- also in Roldan in the long products. And then we are in a way for taking the best and the best synergies and and the more efficiency for processing that material. But this means, obviously, that you need working capital that instead of remaining in Germany working for German players -- now is sent to Spain, transform and send back again to Germany.

This obviously means increase in working capital, but it's something that at the end brings and has its consequence in a specific increase in work capital, then later on when it's normalized the volumes and the rhythm of that material that is processed in the south of Europe for sending back again to the North, shall be normalized. But on the time being, this working capital is increasing, but at the end, and as I mentioned, is obviously as a consequence of the improvements that are coming and the strategy of optimizing obtaining the most synergies from that.

We also -- in view of the green shots, we must be prepared whenever more or less, the market experienced a reaction, take the most of it. I said previously that VDM is the world leader in the oil and gas sector, no doubt. And by far, we shall be prepared not only for taking advantage, but also for drive the recuperation and take the best opportunity. So this is -- all these issues are circumstances to take in place.

Well, the -- it's true that the South African market is under strong pressure. And there is no doubt on that. mostly, obviously, the ones that we think are more critical to be quickly implemented as the barriers for avoiding certain imports. After several years in which more or less the value added in the transformation of all the mining sector has been moving out. And now we -- as you mentioned, we are seeing some real start of some smelters. But still, this is probably maybe not enough for us. And consequently, we still are not seeing good momentum. And in most of the sectors, we -- as you know, we have been transforming Columbus from a pure stainless plant to stainless plus carbon steel plus electrical steel. So we take the best from every steel sector doing.

But still, this is not enough. Still we are facing with very high energy costs. We are pushing and we are trying to obtain better tariffs and so on. And we are under negotiations and discussions for that. So still some of the support that these smelters have obtained from the government have not come to the steel industry and consequently to ourselves. We hope that this may come, but not yet.

Well at the end of the day, we prefer to produce with the scrap is within the most efficient way to produce in our in our production process.

At the end of the day, this is labs that you mentioned are coming from Asia. In Asia -- they are mainly producing with NPI, with nickel pig iron. And we do not see a big difference in terms of prices in [indiscernible] and scrap -- so consequently, we think that producing with the scrap at least for us, it's much more efficient. The producers that imported slabs, well, probably this is a question for them. They probably may have their benefits -- and well, they can be impacted also by the measures. So let's see how this develop moving forward?

In addition, our strategy, as Carlos mentioned, we find the best for melting stainless steel scrap or most competitive nickel is coming from melting stainless steel scrap. And every time we have just made trials for exploring every possibility. This always has been the preferred one.

In regarding of the effect of the energy cost in our case, keep in mind that the 1 which is hurting us more is the increase in gas. So consequently, this is not affecting the slabs that may come from outside because the higher cost increases is in transforming this slabs for the whole rolling operation. There is what is the concentration of higher energy costs and is more related to that part of the business. So on that basis, should not be a huge advantage. The electricity is high and has remained more high. But the most damaging fact for us in this year with the circumstances in the Middle East is mostly gas, and this shall not be solved bringing slabs from Indonesia or other places -- apart, obviously, that it's fully, as Carlos mentioned, is not aligned with our sustainable environment policy.

Well, in terms of the impact that we expect of the gas and energy we must take into consideration that is mainly focusing in Europe, if we take the prices that we have had in September on electricity, and we compare it to last year, we are having an increase in prices of 74% -- and in gas, the price you can see in the market, the price of September has been also 100% higher than what it was the same as last year. And with all of this, we are talking about an increase of 74% in electricity and 100% in the price of the gases -- and all of that, we are evaluating an impact of EUR 16 million. What I want to say with that is that despite the huge increase in the end, the impact is limited, I would say.

Yes. Let me add also that we have in [indiscernible] some PPAs in order to cover from this very strong increase in energy prices. The PPAs more or less cover 40% -- between 40% to 50% of our necessities. So this, as Esther mentioned, limiting then the impact of the huge price hike.

Thank you, Rosie. Okay. The inventory build of VDM, of course, is not the ones representing the higher of the inventory increase. okay? Mostly if you look at the volumes and the activity of the stainless is much more higher in this case than the HPA. So mostly the increase comes from the U.S., and it comes from both sides, okay?

One is on stainless steel -- in order to be able to continue serving the markets despite the closure on the maintenance shutdowns, okay? And the second is -- and the second main factor is, as we mentioned, on [indiscernible], because of the increase on the order book and the increase of the lead times and the higher capacity utilization.

All of that is making our work in progress to increase the build of VDM has also had an impact, but it's less than what we are talking and mainly because of the of the volumes that we are seeing this year which are still weak in the year, although for the order book is getting better, okay? So more or less, the main of the impact is not with medium, although it has had a slight impact as well.

Let's go step by step. First, outlook. Well, the consensus EBITDA, I think, more or less we have explained what is the expected profitability of the fourth quarter. Keeping in mind that the driver of our profits is experiencing are reduced quarter. So it's going to be 2/3 of the normal contribution from America. So on that basis, we shall be not far from where is the consensus.

I think fortunately, the analysts and the active analysts that follow us are very accurate on the projection. So we live comfortably with that. Obviously, still there are uncertainties on place. So and this comes more also to the second question that you are today placing fourth quarter in Europe, we should have been in the third quarter even -- for us, being in breakeven, as I said before, in [indiscernible] base prices of EUR 500 per ton is a great success.

We have not been there just or we have been slightly below slightly below just because the energy. But the energy costs are expected to increase in the fourth quarter compared with the Esther mentioned. So consequently, -- it seems now that it's not going to be the time.

Keeping in mind that in addition, the recovery or the expected and seasonal recovery that normally takes place after summer experienced in Europe after summer. This year has not been active. Still, the market is absorbing some of the inventories that were developed in the first semester in anticipation of the measures and so on. So at the end, the performance of the market in the second half of the year in Europe has not been good.

On that basis, by far, we are not contemplating price increases in the fourth quarter, compensating the high increases in cost. So we understand that the fourth quarter contribution for [indiscernible] should be worse nonrelevant but worse than that of the third quarter. And in case we are close to be on breakeven even at current prices. But probably for that, we need to wait.

The -- our commercial responsible for Europe are confident on the '27. And they start to see more interest on the buying side. So there are some signs that maybe for the starting of '27, we could experience some improvements in the European market. But more or less, this is the feeling still, we have not touched that. But in general, and this goes to the last question 2026 is going to be a good year, as you mentioned. '27 fortunately, I still have not the data. So I can talk openly about my impressions because I do not know the data.

Our budgeting team is expecting to receive the figures for all our business units for next week, and we shall start working on the budget for '27. But what we know from now is that the sectors that are doing good are going to remain good or even better. So as we have explained, for example, everything related that construction of data center still is healthy. Aerospace is going to remain very healthy. And that shall be the time in which we shall start appreciating in results, the good momentum of the aerospace. So what is doing now good is going to keep on or even improving. And the worst performer, as we said before, we were seeing green shots on VDM on the HPA in Europe, so this may come. And in [indiscernible] , we understand that this may come also. So our instant at this time of the year is that '27 is going to be better than '26, no doubt -- because we are not seeing any specific clouds. The recuperation of the oil and gas when it comes, shall be by far a great catalyzer for for VDM.

But as I said before, months before second half or maybe for '28. So it's going to be gradual. That recovery on the HPA in Europe, but at the end, it may come. So we think that there was. So consequently, at this part of the year, we are confident on the prospects for 2027, improving the remarkable figures of '26.

Not sorry, Tristan. It was not 60, but 16 is the impact of the energy cost in the third quarter. That is what I mentioned probably. I didn't pronounce it good, but it was 16 and 24 in the year.

No, 24 is 9 months. Of course.

With CBAM still there are big uncertainties I think that it works at the beginning of the year, the first time that the CBAM benefited us -- and all of this creates that the local players, the local -- sorry, the distributors buy locally instead that buy from imports as we were commenting due this presentation, imports in Europe went down 42% in the first 9 months of the year. And partially, it's due to the CBAM.

We think that the real game changer is going to be the new trade measures. But no doubt that the effect of the CBAM in the first half of the year also was important. Moving forward, we think that the that probably Asian players sooner or later, maybe certified by the companies that the EU assigned -- and this will dilute the effect of the CBAM. But in -- as I mentioned, in the meantime, I think that in the first half of the year, imports move down, and we benefit from this measure.